Poland

Poland

New renewable energy law favouring offshore divides industry

1 December 2012
by Marcin Czekanski

POLAND: A new renewable energy law has finally been submitted to the Polish cabinet for approval, but the terms have divided the wind industry as they are more favourable towards offshore wind than onshore.

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The law will create a new business environment for developers. Commercial-scale wind farms will receive support under the green certificates (GC) system. The Ministry of Economy has proposed that projects coming online in 2013 will receive 0.9GC/MWh, while those coming online in 2017 will receive 0.83GC/MWh, valid for 15 years. This is a cut from the current rate of 1GC/MWh. Offshore wind developers will receive 1.8GC/MWh for 15 years.

However, it is the value of the certificate which really worries the Polish wind industry association PWIA. It depends entirely on demand from electricity sellers, who are obliged to secure a set proportion of their sales from renewable sources.

Penalty

If they fail to do so, they either have to buy the certificates or pay a penalty fee, known as Ozj. And although the draft sets the Ozj value at PLN 288 (EUR72), it does not provide for inflating it as the current support scheme does. "Given that the inflation rate in Poland is 4%, the wind farm operator will lose this money every year compared to current system," said PWIA president Krzysztof Prasalek.

Another disappointment for onshore wind developers is the mechanism introduced by the draft that means that a wind farm owner will lose the right to obtain GCs once it sells electricity for more than 105% of the medium price of electricity in Poland - currently EUR49/MWh. PWIA claims this effectively bans wind farms from the free market. Many wind farm operators sell electricity on the free market instead of under long-term contracts, earning more when selling during peak demand periods.

No wind farm will be profitable without green certificates, because the maximum operators will receive is EUR60-70/MWh, but only for a few hours a day.

PWIA's critical stand is not shared by the Polish Offshore Wind Association, which is generally pleased with the draft. It is however, concerned by the low number of GCs for offshore farms and is lobbying for an increase from 1.8GC/MWh to 2.2GC/MWh for farms located further from the shore, which have higher upfront costs.

The new law was due to come into effect on 1 January 2013. However, it is now unlikely to meet that date. Government officials are instead estimating a start date of mid-2013, but the wind power industry believes the new law is more likely to come into force on 1 January 2014, as it will have to be approved by the European Commission.